How to employ your first employee

I’ve been away this weekend on business. It’s been the most incredible weekend, full of inspirational speakers, amazing people, catching up with friends who I haven’t seen for two years, and I was lucky enough to be manning an exhibition stand, where we were talking to people about our services.

One of the things that came up again and again is “I haven’t got staff yet, but I’m going to be taking on staff in the next six months. What do I need to do?  What do I need to know now?”

My answer was the same to each of them. So I decided to record you a quick video which you can watch above.

The first thing that you must do is issue a contract of employment. Your contract of employment needs to be legal, obviously, but it needs to reflect your business and your culture.

The second thing that you need is payroll. Speak to your accountant or whoever processes your payroll for yourself as a business owner. You can do it yourself. There is software, you can do it yourself from HMRC website, if you’ve got software like Xero or FreeAgent, you can run payroll on that as well, but you need to get yourself set up properly with a PAYE number and get payroll set up.

Third thing that you need is pension and once somebody’s been with you for three months, then they need to automatically be enrolled on your pension scheme. Even if you know that they’re going to opt out, you still need to set up a scheme and have them sent all the official paperwork and let them take their own decision. It’s a really bizarre method. It’s a really weird way of doing it, but that is the reality.

The fourth thing that you need is employers liability insurance. If you’re going to take on staff, you need to have employers’ liability insurance, speak to your insurance broker. They will be able to sort this out for you. You should already have directors and officers’ insurance, or professional indemnity or public liability insurance, depending on the nature of your business. But if you taking on staff, even if you’re taking on freelancers, contractors, Kickstarters or apprentices, or anything like that, you still need to speak to your broker about employers liability insurance.

The final thing that you need is your health and safety policy. And people say, well, “But we’ve got less than five staff, we don’t need health and safety.” That’s not actually correct as with less than five staff, you still have to have a health and safety policy, it just doesn’t have to be documented in the same way. We encourage you (as we would) to put it in your contract of employment so that everybody sees it and signs up to it, but you do need to have a think about the physical and psychological health and safety of all of your staff and carrying out a risk assessment.

Even if you haven’t got staff yet, you need to be thinking about what you’re going to do when you do hire your first employee.